PEZA or TIEZA: Where to Register your Tourism Market Enterprise?

April 1, 2013

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The tourism sector in the Philippines thrives as a vital economic pillar, drawing investors eager to capitalize on its vibrant markets. Choosing between the Philippine Economic Zone Authority (PEZA) and the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) is a pivotal decision for businesses aiming to establish or expand tourism enterprises. This choice impacts tax incentives, operational scope, and compliance requirements. This article examines the roles of PEZA Philippines and TIEZA, detailing their jurisdictions, incentives, eligibility criteria, and registration processes to guide investors in making informed decisions, with insights from Triple i Consulting, a trusted provider of business registration services.

PEZA Philippines: Overview and Scope

PEZA Philippines governs enterprises within Special Economic Zones (SEZs), fostering export-oriented businesses with attractive incentives. Its jurisdiction extends to tourism enterprises operating within these zones, making it a preferred choice for investors prioritizing global markets. Below are key aspects of PEZA’s role:

Jurisdiction: Oversees SEZ businesses, including ecozones designated for tourism, manufacturing, or IT services.
Focus: Prioritizes export-oriented enterprises, sometimes allowing up to 30% domestic sales.
Tourism Relevance: Supports tourism businesses like hotels or resorts in ecozones, provided they align with export goals.
Governance: Established under Republic Act 7916, PEZA promotes economic growth through streamlined regulations.
Locations: Operates in over 400 ecozones, such as Clark, Subic, and Baguio, but excludes certain areas like Metro Manila for new tourism ecozone registrations.

TIEZA: Overview and Scope

TIEZA, created under Republic Act 9593, focuses on developing tourism infrastructure and supporting enterprises within Tourism Enterprise Zones (TEZs). It caters to businesses, enhancing the Philippines’ appeal as a tourist destination. Key points include:

Jurisdiction: Manages TEZs and designated areas for tourism activities like resorts, restaurants, and theme parks.
Focus: Targets tourism services that attract international and local visitors while emphasizing sustainable development.
Infrastructure Role: Develop projects like resorts, transportation systems, and cultural sites to boost tourism.
Asset Management: This department oversees assets like the Zamboanga Golf Course and collects 50% of travel taxes to fund initiatives.
Locations: Operates in TEZs, such as Boracay and Palawan, with specific criteria for designation.

Incentives Comparison: PEZA Philippines vs. TIEZA

PEZA Philippines and TIEZA offer tax incentives to attract investors, but their offerings differ based on business type and location. Below is a comparison of their incentives:

PEZA Incentives:
- Income Tax Holiday (ITH) for 4–7 years, depending on project type.
- Based on gross income, 5% Special Corporate Income Tax (SCIT) after ITH.
- Tax- and duty-free importation of capital equipment and raw materials.
- Exemption from local taxes and licenses.
- Simplified export/import procedures.
TIEZA Incentives:
- ITH for 4–6 years for pioneer or non-pioneer projects.
- Up to 50% tax deductions for environmental or cultural preservation activities.
- Exemption from value-added tax (VAT) and duties on imported capital equipment.
- Entitlement to work visas for foreign nationals.
- Option to repatriate investments and profits.
Key Difference: PEZA focuses on export-driven benefits, while TIEZA emphasizes sustainable tourism and local market engagement.

Eligibility Criteria: Who Qualifies for PEZA or TIEZA?

Eligibility for PEZA Philippines or TIEZA depends on the business’s nature, location, and objectives. Below are the criteria for each:

PEZA Eligibility:
- Must operate within a PEZA-registered SEZ or ecozone.
- Primarily export-oriented (at least 70% of output for export).
- Engages in approved activities, such as tourism services with export potential (e.g., international hotels or BPO services).
- Complies with minimum investment thresholds, varying by ecozone.
- Submits a detailed business plan and financial projections.
TIEZA Eligibility:
- Operates within a designated TEZ or seeks TEZ designation.
- Engages in tourism-related activities, such as hotels, restaurants, or theme parks.
- Demonstrates contribution to tourism development (e.g., job creation, cultural preservation).
- Provides proof of land ownership or a 25-year lease for TEZ projects.
- Secures endorsements from relevant agencies, like the Department of Tourism.

Registration Process: Steps for PEZA Philippines and TIEZA

Registering with PEZA or TIEZA involves distinct processes with specific requirements and timelines. Below are the steps:

PEZA Registration:
- Secure a business registration certificate from the Securities and Exchange Commission (SEC) or the Department of Trade and Industry (DTI).
- Prepare documents: business plan, financial statements, PEZA Application Form, and project feasibility study.
- Apply PEZA’s Investment Promotion Unit at its head office or ecozone offices.
- Undergo evaluation, including site inspections and interviews (30–60 days).
- Receive approval and sign a Registration Agreement outlining incentives and obligations.
TIEZA Registration:
- Obtain SEC/DTI registration and necessary permits from local government units.
- Compile documents: proof of land ownership/lease, TEZ master plan, environmental compliance certificate, and endorsements from agencies like the National Historical Commission.
- Apply to TIEZA’s Tourism Enterprise Zone Management Sector.
- Await evaluation, including TEZ designation assessment (60–90 days).
- Sign a TIEZA Registration Agreement upon approval.
Timeline Comparison: PEZA typically processes applications faster (30–60 days) than TIEZA (60–90 days), depending on project complexity.

Why Choose Triple i Consulting for Registration?

Navigating the PEZA Philippines or TIEZA registration process is complex, requiring meticulous documentation and compliance with evolving regulations. Seeking professional assistance is essential to avoid costly delays or rejections. Below are reasons to partner with Triple i Consulting:

Expertise: Triple i Consulting specializes in business registration, offering tailored guidance for PEZA and TIEZA applications.
Streamlined Process: Our team ensures all documents meet agency standards, reducing processing time.
Regulatory Knowledge: We stay updated on laws like the CREATE Act (2021) and the CREATE MORE Act, ensuring compliance with current incentives.
Customized Solutions: We assess your business goals to recommend PEZA or TIEZA, aligning with your operational strategy.
Trusted Provider: As a leading consultancy at Triple i Consulting, we have a proven track record of successful registrations for tourism enterprises.

Wrapping Up

Choosing between PEZA Philippines and TIEZA to register a tourism enterprise demands careful consideration of your business’s location, export orientation, and long-term goals. PEZA excels for export-focused enterprises within SEZs, offering robust tax incentives like ITH and SCIT. TIEZA, conversely, supports tourism businesses in TEZs, emphasizing sustainable development and local market engagement. Both agencies, shaped by recent reforms like the CREATE Act, provide compelling benefits but cater to distinct operational models. The registration process, while intricate, can be navigated effectively with expert guidance. For investors seeking to establish a foothold in the Philippines’ thriving tourism sector, aligning with the right agency is a strategic step toward success.

Is Assistance Available?

Yes, Triple i Consulting offers expert support to simplify the complex PEZA or TIEZA registration process. Contact us today to schedule an initial consultation with one of our experts: